Naked Economics: Undressing the Dismal Science pdfdrive com

Preferences change with income, particularly with regard to the environment.
Poor people care about different things than rich people do. By global standards,
poor does not mean settling for a Ford Fiesta when you really wanted the BMW.
Poor is watching your children die of malaria because you could not afford a $5
mosquito net. In parts of the world, $5 is five days of income. By those same
standards, anyone reading this book is rich. The fastest way to end any
meaningful discussion of globalization is to wave the environment card. But let’s
do a simple exercise to illustrate why it may be terribly wrong to impose our
environmental preferences on the rest of the world. Here is the task: Ask four
friends to name the world’s most pressing environmental problem.
It’s a fair bet that at least two of them will say global warming and none will
mention clean water. Yet inadequate access to safe drinking water—a problem
easily cured by rising living standards—kills two million people a year and
makes another half billion seriously ill. Is global warming a serious problem?
Yes. Would it be your primary concern if children in your town routinely died
from diarrhea? No. The first fallacy related to trade and the environment is that
poor countries should be held to the same environmental standards as the
developed world. (The debate over workplace safety is nearly identical.)
Producing things causes waste. I remember the first day of an environmental
economics course when visiting professor Paul Portney, former head of
Resources for the Future, pointed out that the very act of staying alive requires
that we produce waste. The challenge is to weigh the benefits of what we
produce against the costs of producing it, including pollution. Someone living
comfortably in Manhattan may view those costs and benefits differently from
someone living on the brink of starvation in rural Nepal. Thus, trade decisions
that affect the environment in Nepal ought to be made in Nepal, recognizing that
environmental problems that cross political boundaries will be settled the same
way they always are, which is through multilateral agreements and
organizations.
The notion that economic development is inherently bad for the environment
may be wrong anyway. In the short run, just about any economic activity
generates waste. If we produce more, we will pollute more. Yet it is also true
that as we get richer, we pay more attention to the environment. Here is another
quiz. In what year did air quality in London (the city for which we have the best

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long-term pollution data) reach its worst level ever? To make it easier, let’s
narrow the choices: 1890; 1920; 1975; 2001. The answer is 1890. Indeed, the
city’s current air quality is better than at any time since 1585. (There is nothing